DESCRIPTION
A firm (the labour hire firm) offers remuneration structures for individuals who perform work or provide services (the service provider). 2. The service provider enters into an agreement to become a beneficiary of a discretionary trust (discretionary trust) which is associated with the labour hire firm. This agreement also identifies additional beneficiaries (e.g. the service provider's spouse) and the basis on which the trustee will allocate discretionary distributions. No assets are transferred to or held by the trust. 3. The service provider or the labour hire firm enters into a contract to provide services for a client of the labour hire firm (the end user). 4. In some cases, the end user may use a recruitment agency (the recruitment agency) as an intermediary to contract with the service provider via the labour hire firm to provide services to the end user. 5. In either situation, the labour hire firm may either enter into contracts in its own capacity or in its capacity as trustee of the discretionary trust. 6. The service provider then performs work or services for the end user. 7. Once work is performed or services provided, the labour hire firm invoices either the recruitment agency or the end user. 8. Payment for work performed or services provided are paid by the labour hire firm via the discretionary trust. Although the service provider is not guaranteed to receive any distributions from the discretionary trust, the discretionary trust makes payments on a regular basis to any one of, or a combination of, the following: a. the service provider, or b. an associate or associates of the service provider, typically a spouse or partner. 9. Although distributions are purportedly discretionary, in reality, the total amount of the payments are consistent with the service provider's set rate of remuneration less the management fees deducted by the labour hire firm. 10. There is limited economic rationale for the use of the arrangement, aside from the attempted avoidance of taxation or superannuation guarantee obligations.